US worried Iraqi court's ruling on Kurdistan's energy sector could “worsen economic conditions”

ERBIL (Kurdistan 24) – Barbara Leaf, Assistant Secretary of State for Near Eastern Affairs, on Wednesday during a press conference said the US is worried that Iraqi Federal Supreme Court's Feb. 15 ruling on its oil and gas sector could worsen economic conditions in Iraq.

In February ruling, the Iraqi Supreme Court had also contentiously ruled that the Kurdistan Region's oil and gas deals were "unconstitutional." 

Following the court decision, Kurdish leaders, the Kurdistan Regional Government (KRG), and the Kurdistan Parliament issued separate statements denouncing the court's decision.

Leaf said that during her visit to Erbil and Baghdad she shared the US concern with Kurdish and Iraqi leaders over “an emerging economic crisis was going to be over and was going to overlay what was already a very serious political crisis” due to this decision.

Nevertheless, she said the US does not take a legal position on the “summary decision by the Iraq Supreme Court invalidating of Kurdish Regional Government arrangements for exports.”

But she added that pushing this court decision amidst an “ongoing crisis over political crisis, over government formation, simply would risk a widening kind of economic crisis and that is the last thing that the Iraqi public needs.”

“So what I suggested was that Baghdad and Erbil, discuss arrangements to take this into third-party negotiation or some other such venue such that essentially, they could provide the space for discussions of a technical nature.”

Read More: ‘Iraq needs oil and gas and revenue-sharing laws’: PM Barzani

She also said such discussions could focus on something “what everyone agrees is, is long overdue and quite necessary, which is a hydrocarbons law."

"I think the message is well understood in both Baghdad and Erbil. I'm quite confident that Iraq's political leaders in both places can find a good instrument for discussing this whether through formal mediation or directly themselves.”

She underlined that there “is no question that there's a need for a larger hydrocarbon legal framework to resolve this.”

“But in the meantime, I'm quite concerned, Washington is quite concerned that rushing forward and implementing this decision risks driving US firms out of Iraq, other firms out of Iraq, which would be a terrible vote of no confidence in the business environment in Iraq and frankly, could produce wider economic repercussions well beyond the Kurdistan region of Iraq.” 

Read More: Existing KRG oil contracts must be respected: US

In August, the United States Consulate General in Erbil said in a Facebook post that the existing oil contracts that the Kurdistan Region has signed with international oil companies must be respected.

“We...agree existing oil contracts must be respected,” the US Consulate General wrote in the post, adding the country supports the Kurdish government’s dialogue with its Iraqi counterpart on oil and gas issues.